Former FOMC Member Admits The Fed Manipulates Asset Prices

The Fed often treats financial markets as a beast to be tamed, a cub to be coddled, or a market to be manipulated. It appears in thrall to financial markets, and financial markets are in thrall to the Fed, but only one will get the last word. – Former FOMC member, Kevin Warsh – The Fed Needs New Thinking

Please note, a large portion of the source links, plus the idea for this commentary, were sourced from GATA’s latest dispatch regarding the possible appointment of Warsh as the next Fed Chairman.

The quote above is from former FOMC board member, Kevin Warsh, who appears to be Trump’s top candidate to assume the Fed’s mantle of manipulation from Janet Yellen. By way of relevant reference, Warsh happens to be the son-in-law of Ronald Lauder, who is a good friend of Trump’s. He is also a former Steering Committee member of the Bilderberg Group. GATA has published a summary reprise of direct evidence from previous written admissions by Warsh the the Fed actively manages financial asset prices, “including bolstering the share price of public companies” (from link above).

In addition to stocks, Warsh admitted in the same essay that, “The Fed seeks to fix interest rates and control foreign-exchange rates simultaneously” (same link above). This task is impossible without suppressing the price of gold, something which began in earnest in 1974 when, under the direction of then Secretary of State, Henry Kissinger, paper gold futures contracts were introduced to the U.S. capital markets. This memo, written by the Deputy assistant Secretary of State for International Finance and Development, was sent to Kissinger and Paul Volcker in March 1974: Gold and the Monetary System: Potential U.S.-EC Conflict (note: the source-link is from GATA – it was discovered in the State Department archives by Goldmoney’s John Butler).

The nature of discussions after that memo, the minutes of which are now publicly available, center around the fact that several European Governments were interested in re-introducing gold into the global monetary system. This movement was in direct conflict with the interests of U.S. elitists and banking aristocrats, as U.S. had successfully established the petro-dollar as the reserve currency.

In 2009 GATA sent a Freedom Of Information Act request to the Fed in an attempt to get access to documents involving the Fed’s use of gold swaps (this letter written by Warsh confirms the existence of the use of gold swaps). Warsh, who was the FOMC’s “liaison” between the Fed and Wall Street, wrote a letter back to GATA denying the request.

The fact that Warsh has openly acknowledged that the Fed manipulates assets, including an implicit admission that the Fed seeks to suppress the price of gold, might give some in the gold community some hope that Warsh, if appointed to the Chair of the Fed, might reign in the Fed’s over interference in the financial markets.

On the contrary, I believe this makes him a bigger threat to democracy, capitalism and freedom than any of his recent predecessors. Warsh is better “pedigree’d” and politically connected than either Bernanke or Yellen. His high level involvement in the Bilderberg Group ties him directly to the individual aristocrats who are considered to be the most financially and politically powerful in the western world. Without a doubt he has far more profound understanding of the significance of gold as a monetary asset than any modern Federal Reserve FOMC member except, perhaps, Alan Greenspan.

The good news for the gold investing community is that it becomes increasingly evident that China, together with Russia and several other eastern bloc countries, is working to remove the dollar as the reserve currency and reintroduce gold into the global monetary system. A contact and subscriber to my Mining Stock Journal who happens to live and work in Shanghai has sent further evidence (and here) that China is working toward launching a gold-backed yuan oil futures contract.

This will be a complete game-changer. It’s also likely why the western Central Banks have doubled their efforts to keep the price of suppressed over the last 6 weeks. My contact believes there’s a possibility that the contract will be rolled out after Xi is “re-elected” toward the end of October (the Party Congress convenes after the week-long National Holiday observance).

My personal view is that China will work more gradually to roll out a futures contract that effectively “disconnects” the petro-dollar and the dollar’s reserve status in order to minimize the adverse, albeit temporary, consequences of this. The first iteration could be a simple yuan-denominated contract to get the system working. The foremost consequence of this, of course, will be the massive transfer of wealth and power from the United States and its European vassal countries to the emerging global power in the eastern hemisphere.

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Unless I am mistaken, neither of those links provided by the subscriber mentions gold convertibility or backing of yuan oil futures contracts.

The original article that appeared suddenly in Nikkei Asian Reviews on Sep 1st 2017 claiming gold convertibility of yuan oil futures contracts (but only in very vague terms regarding the timeline), and which up to now has been virtually the sole quoted source in hundreds of web reports, mentioned not one single official Chinese source.

Neither has Hugo Salinas Price (who should be well-connected) in his two recent enthusiastic articles on “gold backed yuan oil futures by the end of the year” on his plata.mx blog.

Not saying it isn’t true, just that one ought to be cautious in the apparent absence of official Chinese CB or government sources. It would be a pity if the report was a red herring.

My understanding, which might not be correct, is that oil futures are planned to be sold on the Shanghai Exchange, priced in yuan. I’ve never read anywhere of any official plan to back yuan with gold ie. redeemable like a gold certificate. As an oil seller, you will be free to convert those yuan (or not) into anything you wish, including gold -presumably, on the Shanghai Exchange.

Again, I could be wrong, but if they were to do that – make yuan redeemable at no cost – wouldn’t they have to fix the yuan price for gold and abandon a US dollar fix?

Yes, you are correct. That is why I said that I expect they’ll get a simple yuan/oil futures contract rolled out first and get that functioning smoothly. Once they have their systems de-bugged with that one, I suspect they’ll roll out a similar contract that will have the gold-conversion feature.

This topic is of course the linchpin to the current and future monetary systems. But an abrupt shift means war, and the Chinese know it. I suspect Dave is correct about a slow, gradual, non-confrontational “straws being pulled” method from Beijing, that is pure Sun Tzu..

BTW, physical is cheaper here than anywhere in the world, including Hong Kong. I keep telling all my Chinese friends to quit wildly speculating and just stack! Not much monetary understanding here yet though, at the grassroots level.. The PBOC and Beijing understand it completely however, without a doubt..